The ECB reckons the euro area has shown resilience in the face of the referendum vote. Therefore no change is warranted at this stage. Mr Draghi made it clear instead that any changes – should they be necessary - would occur when the ECB staff release new growth and inflation forecasts in September. The risks remain to the downside and the ECB has left the door ajar for further monetary policy easing in a couple of months’ time. Already this morning we have seen the Eurozone flash PMIs come in. Further resilience is evident. The composite PMI weaken marginally from 53.1 last month to 52.9 for July. This was better than analysts had expected. Germany continues to drive this growth with its composite PMI rising to its highest level for the year (55.5). This improvement ran counter to expectations and some of the more negative surveys earlier in the week (e.g. the ZEW).

Equity markets appear to be ending the week on a negative note as investors reassess the potential support from central banks. Wall Street’s S&P 500 eased back from Wednesday’s record high following a couple of disappointing earnings figures from Intel and Starbucks. With one-fifth of the S&P 500 Q2 corporate earnings figures revealed so far, closed to two-thirds have beaten earnings expectations. The Euro Stoxx index was broadly flat yesterday with all of the major European exchanges in negative territory in early trading. Asian equity markets have fallen overnight as optimism concerning additional stimulus in Japan fades. The Nikkei closed down over 1% last night after Bank of Japan Governor Kuroda revealed in an interview that there is “no need and no possibility for helicopter money”. The so-called helicopter drop is a metaphor for an unprecedented tool of monetary policy whereby large sums of printed central bank money is distributed to the public in order to stimulate the economy. Ruling out this extreme option has triggered a strengthening in the Japanese Yen which in turn is bad news for exporters and the Yen sensitive Nikkei stock market.

This morning sees the launch of the new ‘flash’ PMI surveys for the UK. These are an early estimate for the final PMI survey due in two weeks’ time and incorporate around 70% of the survey respondents. These will provide the first tangible indicator of the impact of the Brexit vote on UK business activity. Both the services and manufacturing PMIs are expected to show activity dip below the 50 expansion (>50) / contraction (<50) threshold. Analysts in the latest Bloomberg survey expect to see the composite survey fall from 52.4 last month to 49.0 for July. Later this afternoon we have the flash manufacturing PMI for the US. On the currency markets EUR/USD is broadly unchanged over the last 24 hours at $1.103. EUR/BP has moved slightly lower from 83.4p to 83.1p over the same time period. Meanwhile GBP/USD is changing hands at $1.327, up from $1.323 yesterday morning.